Column: Workers' Comp

Opinion | This Denied-Claims Data from Lockton Is Turning Heads

By: | August 30, 2018

Roberto Ceniceros is a retired senior editor of Risk & Insurance® and the former chair of the National Workers' Compensation and Disability Conference® & Expo. Read more of his columns and features.

In nearly 25 years of reporting on risk management, I don’t recall seeing a research report that so struck me for its potential to help upend the handling of workers’ comp claims.




Earlier this year, Lockton Companies released a report that’s turning heads among savvy employers hunting for practical strategies to improve claims performance.

The broker’s analysts found 67 percent of denied claims convert to paid claims within a year. The kicker: Denying then approving claims increases costs 55 percent over claims paid without first getting denied.

Claims denied and then paid cost $15,694, on average, while claims accepted and paid cost $10,153.

Wow! That’s a bombshell.

Every employer might want to evaluate whether to alter their current claims management strategies and perhaps rewrite their expectations of third-party administrators and insurers.

Lockton looked at 273,000 claims from 150 employers and found that claim denial rates increased between 2013 and 2017. So denied claims have the potential to drive needless costs, and yet more claims are getting denied.

The report also strikes me for its revelation that some traditional practices for managing claims have been a significant blunder, costing employers countless dollars over the years. But that’s my interpretation of it, not the report authors’ conclusion.

Lockton found that expenses including litigation account for the extra costs of denied and then accepted claims. There are also soft costs, Lockton points out, such as decreased productivity.

What’s also troubling is that Lockton looked at 273,000 claims from 150 employers and found that claim denial rates increased between 2013 and 2017. So denied claims have the potential to drive needless costs, and yet more claims are getting denied.

Lockton told Risk & Insurance® increased amounts of data confronting claims adjusters and employers may be driving the increased claims denials.

Does that mean data’s promise is questionable? I’ll leave that for another discussion to focus on how Lockton’s findings could help upend the normal handling of claims.




Lockton’s study emerges as more employers adopt advocacy strategies, with some beginning to show positive outcomes. Advocacy refers to a less adversarial, friendlier claims management approach.

Advocates talk about simplifying claims processes for injured workers. They talk about spending less time and using fewer resources questioning the legitimacy of so many claims. Those resources would be better spent on the smaller number of truly challenging claims that generate greater cost because of their specific attributes.

Lockton’s findings are helping fuel the advocacy camp by confirming that, indeed, the claims industry may be ill-served by aggressively questioning the legitimacy of too many claims.

That should have risk managers asking whether the claims handlers managing their claims — be it insurers, third-party administrators or in-house adjusters — have been taking the right approach. &

More from Risk & Insurance